Correlation Between THE HILLMAN and Clarkston Founders

Can any of the company-specific risk be diversified away by investing in both THE HILLMAN and Clarkston Founders at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining THE HILLMAN and Clarkston Founders into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between THE HILLMAN FUND and Clarkston Founders, you can compare the effects of market volatilities on THE HILLMAN and Clarkston Founders and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in THE HILLMAN with a short position of Clarkston Founders. Check out your portfolio center. Please also check ongoing floating volatility patterns of THE HILLMAN and Clarkston Founders.

Diversification Opportunities for THE HILLMAN and Clarkston Founders

0.79

Correlation Coefficient

THE HILLMAN  Clarkston Founders

Poor diversification

The 3 months correlation between THE and Clarkston is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding THE HILLMAN FUND and Clarkston Founders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clarkston Founders and THE HILLMAN is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on THE HILLMAN FUND are associated (or correlated) with Clarkston Founders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clarkston Founders has no effect on the direction of THE HILLMAN i.e., THE HILLMAN and Clarkston Founders go up and down completely randomly.

Pair Corralation between THE HILLMAN and Clarkston Founders

Assuming the 90 days horizon THE HILLMAN FUND is expected to generate 0.99 times more return on investment than Clarkston Founders. However, THE HILLMAN FUND is 1.01 times less risky than Clarkston Founders. It trades about 0.06 of its potential returns per unit of risk. Clarkston Founders is currently generating about 0.04 per unit of risk. If you would invest  2,662  in THE HILLMAN FUND on August 31, 2024 and sell it today you would earn a total of  703.00  from holding THE HILLMAN FUND or generate 26.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

THE HILLMAN FUND  vs.  Clarkston Founders

THE HILLMAN FUND

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in THE HILLMAN FUND are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, THE HILLMAN is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Clarkston Founders

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Clarkston Founders are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, Clarkston Founders is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with THE HILLMAN and Clarkston Founders

The main advantage of trading using opposite THE HILLMAN and Clarkston Founders positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THE HILLMAN position performs unexpectedly, Clarkston Founders can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Clarkston Founders will offset losses from the drop in Clarkston Founders' long position.

The idea behind THE HILLMAN FUND and Clarkston Founders pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.